Correlation Between Agilent Technologies and Charles River
Can any of the company-specific risk be diversified away by investing in both Agilent Technologies and Charles River at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Agilent Technologies and Charles River into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Agilent Technologies and Charles River Laboratories, you can compare the effects of market volatilities on Agilent Technologies and Charles River and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Agilent Technologies with a short position of Charles River. Check out your portfolio center. Please also check ongoing floating volatility patterns of Agilent Technologies and Charles River.
Diversification Opportunities for Agilent Technologies and Charles River
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Agilent and Charles is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Agilent Technologies and Charles River Laboratories in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Charles River Labora and Agilent Technologies is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Agilent Technologies are associated (or correlated) with Charles River. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Charles River Labora has no effect on the direction of Agilent Technologies i.e., Agilent Technologies and Charles River go up and down completely randomly.
Pair Corralation between Agilent Technologies and Charles River
Taking into account the 90-day investment horizon Agilent Technologies is expected to generate 0.98 times more return on investment than Charles River. However, Agilent Technologies is 1.02 times less risky than Charles River. It trades about -0.12 of its potential returns per unit of risk. Charles River Laboratories is currently generating about -0.26 per unit of risk. If you would invest 14,418 in Agilent Technologies on January 26, 2024 and sell it today you would lose (669.00) from holding Agilent Technologies or give up 4.64% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Agilent Technologies vs. Charles River Laboratories
Performance |
| Timeline |
| Agilent Technologies |
| Charles River Labora |
Agilent Technologies and Charles River Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Agilent Technologies and Charles River
The main advantage of trading using opposite Agilent Technologies and Charles River positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Agilent Technologies position performs unexpectedly, Charles River can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Charles River will offset losses from the drop in Charles River's long position.| Agilent Technologies vs. ICON PLC | Agilent Technologies vs. Mettler Toledo International | Agilent Technologies vs. Laboratory of | Agilent Technologies vs. IDEXX Laboratories |
| Charles River vs. ICON PLC | Charles River vs. Mettler Toledo International | Charles River vs. Laboratory of | Charles River vs. IDEXX Laboratories |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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